The big news in the markets on December 16th was the long awaited Zynga IPO, and how it created over $1 billion in market capitalization in a matter of minutes. However, that wave of euphoria did not even last a few hours as the stock is now falling, and is well below the opening price of $10 per share.
The IPO "flip" now has the same attention span as everything else in the market. After pricing its IPO at $10, and breaking well above, even hitting $11.50 momentarily, the stock is now trading at $9.51 and probably about to be halted within minutes of first seeing public trade. Another epic win for the GS-led underwriting syndicate. As a reminder - if Goldman is selling you something, don't buy it. And who could possibly think that virtual farms aren't real cashflow positive? - Zerohedge
Like Zynga, nearly every new IPO implemented has not met expectations within days of their inception into the markets. GM, which was backed by the Federal government and billions of dollars in low interest capital, initiated its offering at $35 a share only to now be floundering just above $20 barely a year later. LinkedIn, another technology and social media based company, opened up in May of 2011 at $94.25 per share, and now is selling at $64.08.
Public offerings no longer reflect the potential fundamentals of a company, but instead are short-term profit taking facilities for insiders and brokers that underwrite the IPO. Recently, news came out that companies were lobbying Congressmen with inside tracks to purchase shares in upcoming IPO's in exchange for favored legislation for them. Former Speaker of the House Nancy Pelosi was recognized as receiving insider information and special treatment for her husband to buy into VISA before the IPO was implemented, at the same time Congress was working on new bank card and credit card legislation.
Zynga's IPO today was highly praised, and highly marketed, but once again it appears that those who bought into the hyperbole could be losers in their investment. In less than two hours, Zynga stock has falled below the initial opening price, and like almost all recent IPO's in 2010 and 2011, they are not equities worth buying into for potential profits in your portfolio.
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